E-cigarette tax bound to fail
My name is Adam Tredwell, and I am the president and one of the founders of Vermont Vapor Inc. Vermont Vapor Inc. is the oldest wholesale manufacturer in the United States of e-liquid (the liquid vaporized in electronic cigarettes). If House Bill 884 is enacted as currently written, it will cost Vermont money and jobs. Vermont Vapor will either be forced to relocate or close — as will other e-cigarette businesses within the state. For those businesses that do not rely solely on the sale or manufacture of e-cigarettes and related products, but still derive a significant amount of income therefrom, they will likely lose profits and cut staff.
The provision of the bill instituting a 92 percent tax on “tobacco alternatives” will not raise money for the state; it will cost the state money and jobs. The vast majority of e-cigarette users currently buy most of their supplies online. If they are Vermont residents and purchase from us or from another e-cigarette vendor in this state, they are currently paying sales tax on their purchase. If this is passed, the money that would have stayed in Vermont and those taxes that would have been paid will go elsewhere. As will the jobs that such an industry and marketplace produce. Customers will not pay twice the price for a product that can be purchased on a different website for half as much. Will it really matter to the consumer whether the product is shipped from Lebanon, N.H., vs. Castleton, Vt.?
Additionally, because there are thousands of these sellers both in the United States and abroad, Vermont would, as a practical matter, neither be able to shut off the extra-territorial supply nor be able to enforce its tax regime around the country, much less around the globe. As a corollary, if this is intended to deter or prevent users from getting or using electronic cigarettes, the same national and international supply dynamics would prevent success. By way of example: At one time the Food and Drug Administration was attempting to stop the import of electronic cigarettes into America and had issued a directive to seize all shipments containing electronic cigarettes. Vermont Vapor was able to get every single order through customs, as were most other retailers and consumers. The FDA and customs had the full weight of the federal government behind them and failed miserably. Later the FDA was found not to have the authority to stop these shipments. Which was good because that was one enforcement activity for which they lacked the capability.
Finally, let me express a personal sentiment. The day I have to beg bureaucrats to keep my company from being destroyed is the day I resign. If you want money and jobs, go make them yourselves.
ADAM B. TREDWELL